Bank of England steps up to push along Co-op Bank rescue plans, amid worries buyers might be shying away from the struggling lender
The Bank of England's regulatory team has begun making plans of its own for Co-op Bank, as they become increasingly impatient with the troubled lender's sale.
The Co-op Bank, which is currently 20 per cent owned by the wider Co-operative Group, revealed last month it was looking for a buyer for the whole of the business.
Up until that point, the bank was undergoing an ambitious turnaround plan, after a £1.5bn black hole was found in its accounts in 2013. However, it announced factors like lower for longer interest rates had put a crimp in its plans to raise capital organically.
Read more: OneSavings boss: If Co-op Bank sale fails we'll pick up the pieces
Now, the Sunday Telegraph reports the Prudential Regulation Authority (PRA) has become concerned no buyer will be found in the near future and has turned to external advisers to help draw up alternative plans for the lender. It is reported these plans could go as far as starting the process of winding up the bank if it is clear there is no hope on the horizon.
Co-op Bank, which announced a £477m loss for 2016, has already said it might have to ask investors for as much as £750m if a suitable buyer cannot be found.
Although a few potential bidders have emerged for certain parts of the lender, such as particular mortgage books, there has been less interest in buying the bank as a whole. Challenger sources have previously told Morning Wire would-be buyers are put off by, among other issues, the firm's pension scheme burden.
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If the PRA is forced to step in, it will mark the first time the Old Lady of Threadneedle Street has done so since 2009.
The Bank of England and Co-op Bank both declined to comment.